[Federal Register Volume 61, Number 174 (Friday, September 6, 1996)]
[Rules and Regulations]
[Pages 47082-47086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22372]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1845, 1852 and 1853
Revision to NASA FAR Supplement Coverage on Government Property
AGENCY: Office of Procurement, Contract Management Division, National
Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: This is a final rule amending the NASA FAR Supplement to
incorporate changes pertaining to government property reporting by
contractors. The intent of this rule is to improve the completeness,
accuracy and timeliness of the reporting process.
EFFECTIVE DATE: September 6, 1996.
FOR FURTHER INFORMATION CONTACT: Larry G. Pendleton, (202) 358-0487.
SUPPLEMENTARY INFORMATION:
Background
Recent experience at NASA in preparing and auditing annual
financial statements as required by the Chief Financial Officer's (CFO)
Act has led to the need for changes in the contract property reporting
process to improve the completeness, accuracy and timeliness of
information received. NASA does not maintain detailed records of
government property in the possession of contractors. Pursuant to the
Federal Acquisition regulation (FAR) 45.505 the contractor's property
control records constitute the Government's official property records.
All NASA contracts, under which the contractor is accountable for
government property, are required to contain a provision that specifies
the annual submission of a report containing summary financial and
property information on the property in the contractor's custody.
Therefore, when agency requirements for financial/property management
information change, they must be implemented by NASA contractors in
possession of government property. In formulating the rule, NASA
objectives have been to streamline the report to obtain only
information necessary to report on and conduct oversight of contractor
held property, and to generally minimize the impact on reporting
entities.
Summary of Substantive Comments
One comment objected to the inclusion of data on costs for
construction-in-progress and work-in-process on the grounds that such
requirements are inappropriate in a property reporting system, and that
the information is not currently available from contractor property
records. This data is necessary for NASA to comply with Office of
Management and Budget (OMB) guidance on the form and content of federal
agency financial statements, and with the forthcoming accounting
standard on property, plant, and equipment to be issued by the Federal
Accounting Standards Advisory Board (FASAB). NASA Form (NF) 1018 is a
financial report about government property in the possession of
contractors. Therefore, contractors may be required to extract
financial information from other contractor record systems instead of
exclusive reliance on existing property systems for needed information.
The commenter acknowledged that the required information is available
from other contractor records. In addition, contractors are required by
FAR 45.505(b) to provide financial accounts
[[Page 47083]]
in their property control systems for government-owned property in
their possession or control. The order of property classification
accounts on NF 1018 has been changed as suggested by public comment to
group real property accounts together.
Another comment objected to NF 1018 Item 19, Type of Deletion as
requiring major property record system changes in order to furnish this
level of detail. This category is new in name only, currently being
categorized as Disposals on the present form. Detailed lists of
information about these disposals are now required to be maintained by
contractors in the event they are needed by NASA organizations.
Replacing Disposals with Type of Deletion will generate no new
information requirements for contractors, and will make reporting more
complete, accurate, and comparable among contractors by standardizing
the way in which deletion types are provided to the government.
However, as recommended by the commenter, the types of deletions have
been rearranged, two types have been combined, and three have been
deleted since they are part of the plant clearance process.
There was objection in one comment to a proposed requirement that
property shipped to others remain on the shipping contractor's
accountable records until evidence of receipt is obtained from the
consignee. The comment pointed out that receiving contractors do not
normally acknowledge receipt, and that issues of liability, taxable
location, and new suspense systems were raised by the proposed
requirement. While NASA does not agree that all of the issues raised by
the comment are valid, there are acknowledged difficulties in tracking
items assigned to a carrier for shipment. The objective sought by the
proposed arrangement is clear and consistent accountability for
government property at all times. Based upon the concerns expressed in
the comment, the final rule will be changed to provide that property in
transit during the month of September of each year shall be reported by
the shipping contractor, unless confirmation of receipt at destination
has been obtained.
Objection was made in another comment to the revised contract
clause that provides for possible withholding of payment on invoices
when required property reports are not submitted when due. Prompt
receipt of these reports is critical to NASA's ability to prepare
annual financial reports, obtain audit review, and publish them when
due as required by law. Submission of property reports when required is
a contractual obligation resulting from a specific provision in each
affected contract with which contractors have agreed by executing the
contract. However, in response to the concerns expressed in the
comment, the final rule limits possible withholding to a total of
$25,000 or 5 percent of the amount of the contract, whichever is less.
In addition, explanatory language has been added to the prescription
for the clause making clear the importance of timely report submission
and encouraging efforts to obtain reports by the due date rather than
using the withholding authority.
Another comment noted that there is an effort underway to develop a
standard, government-wide property report and recommends that NASA
delay consideration of this rule pending the results of that effort.
Alternatively, the commenter recommends a public hearing to address its
comments. NASA is represented on the interagency group that is
rewriting FAR Part 45, and the subgroup considering a government
standard form. It is not known when these groups will complete their
work and revise the relevant regulations. The revisions contained in
the proposed rule must be made without further delay to allow NASA to
fulfill its financial management obligations. Public comment on the
proposed rule was received from only one organization. Due to this low
level of expressed interest, a public hearing will not be scheduled.
Procedural Requirements
Review Under the Regulatory Flexibility Act
This rule was reviewed under the Regulatory Flexibility Act of
1980. The rule revises the former regulation by simplifying and
reducing reporting requirements, the costs of which are in any case
reimbursed by the Government. NASA certifies that the rule will not
have a significant economic impact on a substantial number of small
entities.
Review Under the Paperwork Reduction Act
Under 5 CFR 1320.5(b)(2)(i), NASA is required to inform potential
persons who are to respond to the collection of information that such
persons are not required to respond to the collection of information
unless it displays a currently valid OMB control number. Under 5 CFR
1320.5(b)(2)(ii)(C), this paragraph meets that display requirement by
providing the following statement: Information collection associated
with this rule has been approved under OMB Control Number(s) 2700-0017
with an expiration date of 12/31/98. This information collection, as
revised, represents a reduction in the estimated paperwork burden to
respondents from the present reporting requirements. The reporting
format has been reduced from 4 pages to 2, and has been streamlined to
facilitate preparation and to clarify reporting requirements.
Completion of the information collection merely requires contractors to
transcribe data from existing contractor records onto the report.
List of Subjects in 48 CFR Parts 1845, 1852 and 1853
Government procurement.
Tom Luedtke,
Deputy Associate Administrator for Procurement.
Accordingly, 48 CFR Parts 1845, 1852, and 1853 are amended as
follows:
1. The authority citation for 48 CFR Parts 1845, 1852, and 1853
continues to read as follows:
Authority: 42 U.S.C. 2473(c)(1).
PART 1845--GOVERNMENT PROPERTY
2. Section 1845.102-70(a)(3) is revised to read as follows:
1845.102-70 Procedures.
(a) * * *
(3) Requirement that additional facilities that the offeror
requests to be provided by the Government be described and identified
by classification such as ``Land'', ``Buildings'', and ``Equipment''
(see subpart 1845.71); and
* * * * *
1845.106-70 [Amended]
3. In section 1845.106-70, paragraph (d) is revised to read as
follows, paragraph (i) is removed and paragraphs (j) and (k) are
redesignated as paragraphs (i) and (j):
1845.106-70 NASA contract clauses and solicitation provision.
* * * * *
(d)(1) The contracting officer shall insert the clause at 1852.245-
73, Financial Reporting of NASA Property in the Custody of Contractors,
in all cost reimbursement contracts. It shall be included in all other
types of contracts when it is known at the time of award that property
will be provided to the contractor or that the contractor will acquire
property, title to which will vest in the Government prior to delivery
of the contract products. Where all
[[Page 47084]]
property to be provided is subject to the clause at 1852.245-71,
Installation-Provided Government Property (see paragraph (b) of this
section), the clause at 1852.245-73 is not required. Where the clause
is not included in contracts at the time of award, if Government
property is subsequently provided to a contractor, or the contractor is
authorized to acquire property to which the Government takes title, the
clause shall be included in the contract at that time.
(2) Paragraph (c) of the clause at 1852.245-73 permits the
contracting officer to withhold payments, up to a specified dollar
limit, in the event a contractor fails to submit the annual NF 1018 by
the due date. This provision reflects the importance to NASA of
receiving this financial data on time. Upon receipt, the information is
entered into the NASA accounting system and is used in the preparation
of agency annual financial statements. Therefore, timely receipt of
contractor held property financial data is essential to the process. A
concerted effort should be made to obtain NF 1018 reports by the due
date before resorting to the payment withholding alternative.
* * * * *
1845.301 [Amended]
4. In section 1845.301, the definition heading ``Space property''
is revised to read ``Agency-peculiar property''.
1845.407 [Amended]
5. In section 1845.407, the section heading ``Non-Government use of
plant equipment'' is revised to read ``Non-Government use of
equipment''.
6. In the introductory text to section 1845.407, the phrase ``plant
equipment'' is revised to read ``equipment''.
7. In paragraphs (a) (1) and (b) to section 1845.407, the phrase
``plant equipment'' is revised to read ``equipment''.
1845.501 [Amended]
8. In section 1845.501, in the definition of ``Space property'',
the heading ``Space property'' is revised to read ``Agency-peculiar
property'', the phrase ``property peculiar to NASA'' is revised to read
``property unique to NASA'', and the last sentence is removed.
9. In section 1845.501, in the definition ``Centrally reportable
equipment (CRE)'', the phrase ``space property'' is revised to read
``agency-peculiar property''
1845.502-1 [Amended]
10. In section 1845.502-1, the title of the NASA Form 1018 ``Report
of Government-Owned/Contractor-Held Property'' is revised to read
``NASA Property in the Custody of Contractors''.
1845.502-71 [Amended]
11. In paragraph (e) to section 1845.502-71, the heading ``Space
Property'' is revised to read ``Agency-peculiar property''.
12. Section 1845.505-14 is revised to read as follows:
1845.505-14 Reports of Government property.
When required by the contract, the contractor shall submit a report
of NASA Property in the Custody of Contractors, NASA Form 1018, in
accordance with the instructions on the form, in subpart 1845.71, and
the contract clause at 1852.245-73. Contractor property control systems
shall distinguish between Government furnished and contractor acquired
property classification shown in FAR 45.505-14(a) (1) through (5).
1845.7101 [Amended]
13. In 1845.7101 the last sentence is removed and the following
three sentences are added to read as follows:
* * * This report provides information for NASA financial
statements and property management; accuracy and timeliness of the
report are, therefore, very important. Contractors shall retain
documents which support the data reported on NF 1018 in accordance with
FAR subpart 4.7, Contractor Records Retention. Classifications of
property, related costs to be reported, and reporting requirements are
set forth in this subpart.
14. Sections 1845.7101-1, 1845.7101-2, 1845.7101-3, 1845.7101-4 and
1845.7101-5 are revised to read as follows:
1845.7101-1 Property classification.
(a) Contractors shall report costs in the classifications required
on NF 1018, as described in this section. For Land, Buildings, Other
Structures and Facilities, and Leasehold Improvements, contractors
shall report the amount for all items with a unit cost of $5,000 or
more and useful life of 2 years or more. For Plant Equipment, Special
Tooling, Special Test Equipment and Agency-Peculiar Property,
Contractors shall separately report--
(1) The amount for all items with a unit cost of $5,000 or more and
a useful life of 2 years or more, and
(2) All times under $5,000, regardless of useful life.
(b) Contractors shall report the amount for all Materials,
regardless of unit cost.
(c) Land. Includes costs of land, improvements to land, and
associated costs incidental to acquiring and preparing land for use,
for example; appraisal fees, clearing costs, drainage, grading,
landscaping, plats and surveys, removal and relocation of the property
of others as part of a land purchase, removal or destruction of
structures or facilities purchased but not used, and legal expenses.
(d) Buildings. Includes costs of buildings, improvements to
buildings, and fixed equipment required for the operation of a building
which is permanently attached to and a part of the building and cannot
be removed without cutting into the walls, ceilings, or floors.
Examples of fixed equipment required for the functioning of a building
include plumbing, heating and lighting equipment, elevators, central
air conditioning systems, and built-in safes and vaults.
(e) Other structures and facilities. Includes costs of acquisitions
and improvements of structures and facilities other than buildings; for
example, airfield pavements, harbor and port facilities, power
production facilities and distribution systems, reclamation and
irrigation facilities, flood control and navigation aids, utility
systems (heating, sewage, water and electrical) when they serve several
buildings or structures, communication systems, traffic aids, roads and
bridges, railroads, monuments and memorials, and nonstructural
improvements, such as sidewalks, parking areas, and fences.
(f) Leasehold improvements. Includes costs of improvements to
leased buildings, structures, and facilities, as well as easements and
right-of-way, where NASA is the lessee or the cost is charged to a NASA
contract.
(g) Equipment. Includes costs of commercially available personal
property for use in manufacturing supplies, performing services, or any
general or administrative purpose; for example, machine tools,
furniture, vehicles, computers, accessory or auxiliary items, and test
equipment.
(h) Construction in progress. Includes costs for work in process
for the construction of Buildings, Other Structures and Facilities, and
Leasehold Improvements to which NASA has title.
(i) Special tooling. Includes costs of equipment and manufacturing
aids (and components and replacements of these items) that are of such
a specialized nature that, without substantial modification or
alteration, their use is limited to the development or production of
particular supplies or parts, or to the performance of particular
services. Examples include jigs, dies,
[[Page 47085]]
fixtures, molds, patterns, taps and gauges.
(j) Special test equipment. Includes costs of equipment used to
accomplish special purpose testing in performing a contract, and items
or assemblies of equipment.
(k) Material. Includes costs of NASA owned property held in
inventory that may become a part of an end item or be expended in
performing a contract. Examples include raw and processed material,
parts, assemblies, small tools and supplies. Does not include material
that is part of work in process.
(l) Agency-peculiar property. Includes actual or estimated costs of
completed items, systems and subsystems, spare parts and components
unique to NASA aeronautical and space programs. Examples include
aircraft, engines, satellites, instruments, rockets, prototypes and
mock-ups. The amount of property, title to which vests in the
Government as a result of progress payments to fixed price
subcontractors, shall be included to reflect the pro rata cost of
undelivered agency-peculiar property.
(m) Contract work-in-process. Includes the costs of all work-in-
process and excludes the costs of completed items reported in other
categories.
1845.7101-2 Transfers of property.
The procedures in this section apply to all types of transfers.
Only Government installations may furnish Government property to a
contractor. Therefore, procurement, property, and financial
organizations at NASA Centers must effect all transfers of
accountability, although physical shipment and receipt of property may
be made directly by contractors. Such transfers include shipments
between contractors of the same installation, contractors of different
installations, a contractor of one installation to another
installation, an installation to a contractor of another installation,
and a contractor to another Government agency or its contractor. So
that NASA may properly control and account for transfers, they shall be
adequately documented. The procedures described in this section shall
be followed in all cases, to provide an administrative and audit trail,
even if property is physically shipped directly from one contractor to
another. Property shipped between September 1 and September 30,
inclusively, shall be reported by the shipping contractor, regardless
of the method of shipment, unless written evidence of receipt at
destination has been received. Property provided under fixed price
repair contracts remains accountable to the cognizant NASA Center and
is not reportable on NF 1018; property provided for repair under a
cost-reimbursement contract, however, is accountable to the contractor
and reportable on NF 1018.
(a) Approval and notification. The contractor must obtain the
approval of the contracting officer or designee for transfers of
property before shipment. Each shipping document must contain contract
numbers, shipping references, property classifications in which the
items are recorded, unit prices, and any other appropriate identifying
or descriptive data. Unit prices shall be obtained from records
maintained pursuant to FAR part 45 and part 1845 of this chapter.
Shipping contractors shall furnish a copy of the shipping document to
the cognizant property administrator. Shipping and receiving
contractors shall promptly notify the financial management office of
the NASA Center responsible for their respective contracts when
accountability for Government property is transferred to, or received
from, other contracts, contractors, NASA Centers or Government
agencies. Copies of shipping or receiving documents will suffice as
notification in most instances.
(b) Reclassification. If property is transferred to another
contract or contractor, the receiving contractor shall record the
property in the same property classification and amount appearing on
the shipping document. For example, when a contractor receives an item
from another contractor that is identified on the shipping document as
equipment, but that the recipient intends to incorporate into special
test equipment, the recipient shall first record the item in the
equipment account and subsequently reclassify it as special test
equipment. Reclassification of equipment, special tooling, special test
equipment, or agency-peculiar property requires prior approval of the
contracting officer or a designee.
(c) Incomplete documentation. If contractors receive transfer
documents having insufficient detail to properly record the transfer
(e.g., omission of property classification, unit prices, etc.) they
shall request the omitted data directly from the shipping contractor or
through the property administrator as provided in FAR 45.505-2.
1845.7101-3 Computing costs of fabricated special tooling, special
test equipment, agency-peculiar property and contract work in process.
(a) Costs shall be computed in accordance with accepted accounting
principles, be reasonably accurate, and be the product of any one or a
combination of, the following:
(1) Abstracts of cost data from contractor property or financial
records.
(2) Computations based on engineering and financial data.
(3) Estimates based on NASA Form 533 reports.
(4) Formula procedures (e.g., using a 50 percent factor for work in
process items, on the basis of updated Standard Form 1411 estimates or
the contractor's approved estimating and pricing system).
(5) Other approved methods.
(b) Contractors shall report costs using records that are part of
the prescribed property or financial control system as provided in this
section. Fabrication costs shall be based on approved systems or
procedures and shall include all direct and indirect costs of
fabricating Government property.
(c) The contractor shall redetermine the costs of items returned
for modification or rehabilitation.
(d) The computation of work in process shall include the costs of
associated systems, subsystems, and spare parts and components
furnished or acquired and charged to work in process pending
incorporation into a finished item. These types of items make up what
is sometimes called production inventory and include programmed extra
units to cover replacement during the fabrication process (production
spares). Also included are deliverable items on which the contractor or
a subcontractor has begun work, and materials that have been issued
from inventory.
1845.7101-4 Type of deletion.
Contractors shall report the types of deletions from contract
property records as described in this section.
(a) Adjusted. Changes in the deletion amounts, if any, that result
from mathematical errors in the previous report.
(b) Lost, damaged or destroyed. Deletion amounts as a result of
relief from responsibility under FAR 45.503 granted during the
reporting period.
(c) Transferred in place. Deletion amounts that result from a
transfer of property to a follow-on contract with the same contractor.
(d) Transferred to center accountability. Deletion amounts that
result from transfer of accountability to the NASA Center responsible
for the contract, whether or not the items are physically moved.
(e) Transferred to another NASA Center. Deletion amounts caused by
transfer of accountability to NASA Center other than the one
responsible for the contract, whether or not the items are physically
moved.
[[Page 47086]]
(f) Transferred to another Government agency. Deletion amounts that
result from transfer of property to another Government agency.
(g) Purchased at cost/returned for credit. Deletion amounts due to
contractor purchase or retention of contractor acquired property as
provided in FAR 45.605-1; or to contractor returns to suppliers under
FAR 45.605-2.
(h) Disposal through plant clearance process. Deletions other than
transfers; i.e., donations to eligible recipients, sold at less than
cost, or abandoned/directed destruction.
1845.7101-5 Contractor's privileged financial and business
information.
If a transfer of property between contractors will involve
disclosing costs of a proprietary nature, the contractor shall furnish
unit prices only on those copies of the shipping documents that are
sent to the shipping and receiving NASA installations. Transfer of the
property to the receiving contractor shall be on a no-cost basis.
1845.7101-6 [Redesignated]
1845.7101-7, 1845.7101-8, 1845.7101-9 [Removed]
15.-16. Sections 1845.7101-7, 1845.7101-8, and 1845.7101-9 are
removed.
1845.7101-10 [Redesignated]
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
17.-18. Section 1852.245-73 is revised to read as follows:
1852.245-73 Financial reporting of NASA property in the custody of
contractors.
As prescribed in 1845.106-70(d), insert the following clause:
Financial Reporting of NASA Property in the Custody of Contractors
Sept. 1996
(a) The Contractor shall submit annually a NASA Form (NF) 1018,
NASA Property in the Custody of Contractors, in accordance with
1845.505-14, the instructions on the form, and subpart 1845.71.
Subcontractor use of NF 1018 is not required by this clause;
however, the contractor shall include data on property in the
possession of subcontractors in the annual NF 1018.
(b) If administration of this contract has been delegated to the
Department of Defense, the original of NASA Form 1018 shall be
submitted to the NASA installation Financial Management Officer and
three copies shall be sent concurrently through the DOD Property
Administrator to the NASA office identified below. If the contract
is administered to NASA, the original of NF 1018 shall be submitted
to the installation Financial Management Officer, and three copies
shall be sent concurrently to the following NASA office:
(Insert the address and office code of the organization within the
cognizant NASA installation.)
(c) The annual reporting period shall be from October 1 of each
year through September 30 of the following year. The report shall be
submitted in time to be received by October 31. The information
contained in these reports is entered into the NASA accounting
system to reflect current asset values for agency financial
statement purposes. Therefore, it is essential that required reports
be received no later than October 31. The Contracting Officer may,
in the Government's interest, withhold payment until a reserve not
exceeding $25,000 or 5 percent of the amount of the contract,
whichever is less, has been set aside, if the Contractor fails to
submit annual NF 1018 reports when due. Such reserve shall be
withheld until the Contracting Officer has determined that the
required reports have been received by the Government. The
withholding of any amount or the subsequent payment thereof shall
not be construed as a waiver of any Government right.
(d) A final report is required within 30 days after disposition
of all property subject to reporting when the contract performance
period is complete.
(End of clause)
1852.245-78 [Removed]
19. Section 1852.245-78 is removed.
PART 1853--FORMS
20. Section 1853.245(a) is revised to read as follows:
1853.245 Property (NASA Form 1018, Department of Defense Form 1342,
and Department of Defense Form 1419).
(a) NASA Form 1018, NASA Property in the Custody of Contractors.
NASA Form 1018, prescribed at 1845.505-14, shall be used by contractors
for reporting Government-owned property.
* * * * *
[FR Doc. 96-22372 Filed 9-5-96; 8:45 am]
BILLING CODE 7510-01-M
